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28/05/2012
Number Of Retailers Going Bust Leaps 38% In One Year
The number of retailers going bust jumped 38% to 670 in the first quarter of 2012, up from 486 in Q4 2011, according to research by Wilkins Kennedy LLP, the Top 25 accountancy firm.
Anthony Cork, Partner at Wilkins Kennedy, commented: "The double-dip has pulled the retail sector down sharply. It is hard to see consumer spending rebounding in the current environment of slow wage growth and worries over the Eurozone.
"The number of retail insolvencies in the first part of this year has been even higher than last year.
"Creditors and the management of these businesses would have examined their sales over the critical Christmas and New Year trading period and decided they had to pull the plug."
Wilkins Kennedy says that the number of individual retail businesses becoming insolvent is up 3% on the 652 that became insolvent in Q1 2011.
Anthony Cork added: "Last year was bad but this year is even worse. Retailers are still struggling with rents that they feel are far above the market rate and banks are particularly reluctant to extend credit to struggling retail businesses."
Wilkins Kennedy points that high profile insolvencies in Q1 included Clinton Cards, Peacocks, and The Game Group.
Wilkins Kennedy points out that many of the retailers that became insolvent this year were already perilously close to insolvency prior to the double dip recession.
"A lot of retailers have been seen as ‘zombie business’ since the 2009 recession because they have made enough money to service their debts but not enough to invest in solving fundamental problems with their business. These zombie retailers have been the first to go as the UK has re-entered recession," he said.
Wilkins Kennedy explains that very few retailers have been able to renegotiate the rents that they agreed when the retail market was much stronger preventing them from downsizing their businesses and shedding their costs.
Retailers have also had to contend with a reluctance from banks’ and even their suppliers to extend them more credit.
(GK)
Anthony Cork, Partner at Wilkins Kennedy, commented: "The double-dip has pulled the retail sector down sharply. It is hard to see consumer spending rebounding in the current environment of slow wage growth and worries over the Eurozone.
"The number of retail insolvencies in the first part of this year has been even higher than last year.
"Creditors and the management of these businesses would have examined their sales over the critical Christmas and New Year trading period and decided they had to pull the plug."
Wilkins Kennedy says that the number of individual retail businesses becoming insolvent is up 3% on the 652 that became insolvent in Q1 2011.
Anthony Cork added: "Last year was bad but this year is even worse. Retailers are still struggling with rents that they feel are far above the market rate and banks are particularly reluctant to extend credit to struggling retail businesses."
Wilkins Kennedy points that high profile insolvencies in Q1 included Clinton Cards, Peacocks, and The Game Group.
Wilkins Kennedy points out that many of the retailers that became insolvent this year were already perilously close to insolvency prior to the double dip recession.
"A lot of retailers have been seen as ‘zombie business’ since the 2009 recession because they have made enough money to service their debts but not enough to invest in solving fundamental problems with their business. These zombie retailers have been the first to go as the UK has re-entered recession," he said.
Wilkins Kennedy explains that very few retailers have been able to renegotiate the rents that they agreed when the retail market was much stronger preventing them from downsizing their businesses and shedding their costs.
Retailers have also had to contend with a reluctance from banks’ and even their suppliers to extend them more credit.
(GK)
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